Osborne’s horrible hybrid policies

Ordinary fiscal and monetary policy isn't working. So the government has invented some horrible hybrid policies in a desperate attempt to create growth. But the cost is just too high, says Merryn Somerset Webb.

A quiz for you. Fiscal policy can effectively be defined as the redistribution of the nation's wealth from one group to another. Monetary policy can be defined as the manipulation of the money supply. So what is quantitative easing (QE)? Is it a monetary policy or is it a fiscal policy?

It is usually considered to be the former. The Bank of England creates money and uses it to buy assets. In doing so it increases the supply of money. But look a little closer and you will see that it is a fiscal policy too. In keeping rates down and creating a series of asset market bubbles, it is transferring wealth from one group to another. Those who own equities, bonds, or property in the southeast have become much richer. Those who have been forced to buy an annuity, who rely on a fixed income or who once hoped to live on savings interest have become much poorer. So QE is actually both. It's a monetary policy and a fiscal policy (which is a very good reason why we shouldn't do it any more).

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Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.